Hidden traps in mortgage renewals, while not often discussed at the beginning of a mortgage, can present issues that should be brought to attention sooner rather than later.
Mortgage renewals can be somewhat of a hidden part of the MIC mortgage business. Since renewals are often handled directly by the lender and do not require the broker to get involved, they are usually not discussed when the mortgage is being originated.
However, it’s important that brokers know the renewal terms of the lenders they’re dealing with.
Somethings that brokers can make sure to watch for are:
- Lender’s big renewal fees
- Increased interest rates at renewal time
- Requirements for new appraisal
- Other added documentation
- Other renewal charges
When you’re dealing with MIC’s, make it a point to ask what their renewal policies and fees are. If your clients are trying to decide between competing mortgage offers, this may help make the decision easier.
Also, in the long run, informing your clients of the renewal terms from the beginning can reflect well on you as a broker. If the lender becomes a loan shark at renewal time, you are assured that your borrowers were well informed from the start. As they say, knowledge is power and educating yourself and your borrowers from the beginning regarding the renewal terms is beneficial for both borrowers and brokers alike.
But what can you do if a lender doesn’t offer your borrower a renewal?
Unfortunately, not much. While not common, this does happen and the only option is to find another lender. Sadly, your borrower will have to pay all of the associated costs again as well. A mortgage is a contract for a set term. Once that term expires there’s no obligation on the lender to renew.
And remember, keep your eyes open for any hidden traps in mortgage renewals. When you’re going through the renewal requirements, be sure to ask your lender for any clarification if you have any questions. The experts at Kokanee Mortgage are always ready to help.